Tata Teleservices sells tower unit stake to Quippo

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New Delhi: Tata Teleservices has agreed to sell a 49 per cent stake in its telecoms tower arm to another tower firm, valuing the business at an enterprise value of 130 billion rupees.

In a bid to cut costs, Indian mobile operators are increasingly sharing base stations and tying up with independent operators as they expand across vast rural districts and penetrate smaller towns, where low income subscribers dominate.

In November, NTT DoCoMo agreed to buy a 26 per cent in the unlisted Tata Teleservices.

Quippo Telecom Infrastructure Ltd, an unlisted firm in which India's SREI Infrastructure and the Government of Singapore Investment Corp (GIC) own stakes, will pay Tata Tele 24 billion rupees and transfer 5,000 towers to the merged entity.

"This deal assumes a big significance for us ... and coming at a time when all new operators will need passive infrastructure," Anil Sardana, managing director of sixth-ranked mobile operator Tata Teleservices, said on Monday.

"3G and broadband wireless access auctions are round the corner. That will give a lot of opportunity," he said.

The merged tower company, Wireless-TT Info-Services, which will be managed by Quippo, will have 18,000 towers in total and ramp that up to 50,000 by 2010/11.

India last year gave licences to at least five new telecoms firms, which are likely to start services in 2009 in an increasingly competitive market where call rates are already among the world's cheapest.

The government is scheduled to auction spectrum for third-and fourth-generation wireless services at the end of January.

Tata Teleservices had 31 million subscribers at the end of November on the less popular CDMA platform.

Rivals Bharti Airtel, Vodafone Essar and Idea Cellular have formed a joint venture tower firm, which now owns about 80,000 towers, India's largest such company.

Shares in Tata Tele's listed unit, Tata Teleservices (Maharashtra) closed 2.7 per cent up on Monday, while SREI shares jumped about 20 per cent in a Mumbai market that gained 3.2 per cent.

Citigroup and Nomura advised Tata Teleservices, while Quippo was advised by JM Financial.

GSM SPENDING

Tata Tele is looking to spend $2 billion to enter the dominant GSM sector, and Sardana said it would announce the launch of GSM services shortly.

The company has received GSM radio spectrum in 13 of India's 22 telecom service areas and hopes to get airwaves in most of the remaining areas by the end of this month, he said.